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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Product demand - productivity - prices of other resources - and complementary resources






2. Models where firms agree to mutually improve their situation






3. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






4. The difference between total revenue and total explicit costs






5. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






6. The practice of selling essentially the same good to different groups of consumers at different prices






7. The price of a good measured in units of currency






8. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






9. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






10. Ed > 1 - meaning consumers are price sensitive






11. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






12. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






13. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






14. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






15. Total product divided by labor employed. APL = TPL/L






16. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






17. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






18. 0 < Ei < 1






19. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






20. ATC = TC/Q = AFC + AVC






21. A good for which higher income decreases demand






22. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






23. The additional cost incurred from the consumption of the next unit of a good or a service






24. When firms focus their resources on production of goods for which they have comparative advantage






25. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






26. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






27. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






28. AVC = TVC/Q






29. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






30. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






31. Ed < 1






32. The mechanism for combining production resources - with existing technology - into finished goods and services






33. Ei > 1






34. Ed = 1






35. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






36. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






37. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






38. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good






39. The imbalance between limited productive resources and unlimited human wants






40. The change in quantity demanded resulting from a change in the price of one good relative to other goods






41. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






42. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






43. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






44. A good for which higher income increases demand






45. Models where firms are competitive rivals seeking to gain at the expense of their rivals






46. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






47. All firms maximize profit by producing where MR = MC






48. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






49. Demand for a resource like labor is derived from the demand for the goods produced by the resource






50. Exists if a producer can produce more of a good than all other producers